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ABSTRACT
The story of Kiwi International Airlines is a brief one. Begun on a 'shoe-string' in 1994 by Ewan Wilson, the airline had collapsed by 1996. But during that brief time Kiwi Airlines had a dramatic effect on trans-Tasman airfares. This case is designed to allow a discussion of the reasons behind Kiwi Airlines initial success and ultimate failure. The case is particularly suited to explaining the concept of Judo economics or Judo strategy.
INTRODUCTION
In early 1994, Ewan Wilson, owner of a travel agency and qualified pilot, had the idea of offering chartered flights within New Zealand to Fieldays (a national agricultural expo) just outside his home town of Hamilton. This was to be the first step in developing an international airline. In fact, Ewan Wilson would immediately announce, before even a single chartered flight had occurred or even a single sale had taken place, that the ultimate goal was daily flights between Hamilton and Australia. Since Hamilton airport was not an international airport at the time, this made instant headlines in the local newspaper. The initial charter flights did not make a profit, but were deemed a success due to the heightened profile that resulted from the surrounding publicity. On the basis of that publicity, the decision was made to launch charter flights between Hamilton and Brisbane. The target market was New Zealanders hoping to escape winter in warmer Brisbane and Australians wanting to ski New Zealand's renowned ski-fields.
Entering the Trans-Tasman market meant competing against the two incumbents, Air New Zealand and Qantas Airways. Air New Zealand was the national carrier of New Zealand and Qantas was the national carrier of Australia. The two airlines had very similar backgrounds and strategies. Air New Zealand and Qantas were both the current publicly-owned incarnations of long-established government monopolies on air travel. Each airline offered both domestic travel within their respective countries as well as international travel. Both airlines offered first class, business class and economy class travel with a strong emphasis on service. Air New Zealand and Qantas also had frequent flyer programs and links to other international airlines. Moreover, Qantas actually held 19.9% of Air New Zealand shares in 1994. The primary difference between the two airlines with respect to trans-Tasman flights...